Entries in Riddle, Clive (313)

Thursday
Feb052009

The Future Ain’t What It Used to Be

By Clive Riddle, February 5, 2008

A couple of weeks ago, MCOL in conjunction with the Seventh Future Care Web Summit, conducted its annual e-poll on health care trends for the coming year and beyond. As the same three basic questions are asked each year, results have been tracked since 2003. So, given the massive change in the economy during the past twelve months, how do health care executives and other professionals feel about the future?

Answers were not that surprising to the questions: (1) which trends will have the greatest overall impact in 2009; and (2) which predicted trend is least likely to have an impact in 2009. But I was taken aback somewhat with answers to the question which stakeholders will be better off, worse off, or the same in 2009.

Comparing current answers with previous years is difficult, for the first question: "Which of the following health care business trends do you think will have the greatest overall impact in 2008?" That’s because “Effects of the Recession” was contemplated as a trend in previous years, and over half (57.3%) of respondents list that as the trend that will have the greatest impact, and I would agree with them.

Here’s a table listing responses to this question since 2003:

Trend

2009

2008

2007

2006

2005

2004

2003

Advances in health care technology

3.4%

11.8%

7.5%

16.6%

13.6%

11.9%

10.8%

Consumer Driven health plans

3.4%

13.4%

18.5.%

21.0%

22.7%

14.4%

15.1%

Compliance issues

1.1%

0.8%

3.4%

0.8%

0.9%

5.9%

18.0%

Effects of the Recession

57.3%

NA

NA

NA

NA

NA

NA

Health Care Reform Initiatives

21.3%

23.6%

11.0%

28.1%

13.6%

4.3%

N/A

Increased consumer cost sharing

9.0%

33.9%

40.4%

25.8%

38.2%

35.6%

38.8%

Disease Management initiatives

3.4%

12.6%

7.5%

3.0%

5.5%

23.7%

N/A

Other

1.1%

3.9%

11.6%

4.5%

5.5%

4.2%

17.3%

Grand Total

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

 

One way to compare any of the other trends(which have been listed each year) with previous years, you need to multiply this year’s response by two, or divide pervious year’s in half, to factor in this year’s new Recession trend that was missing before. When you do that, it makes the runner-up choice (health care reform initiatives, with 21.3% in 2009) all that more prominent. While all other trends dropped to around a third of their previous levels (except compliance, which still only weighed in at 1.1%) reform stayed basically the same as last year.

So the conclusion for 2009 not surprisingly, is forget everything else, two “R’s - recession and reform, will dominate this year in health care.

When asked “which of the following predicted trends do you feel is least likely to occur or have an impact in the next two years,” respondents had little consensus regarding any particular trend. What is interesting, however, is to compare these answers to previous years.

Here’s a table listing responses to this question since 2003:

Trend

2009

2008

2007

2006

2005

2004

2003

Health Plan cost sharing will level off/slow down

11.2%

15.0%

11.0%

13.1%

19.3%

18.6%

9.5%

Major growth of Consumerism initiatives including consumer driven plans

22.5%

15.0%

17.8%

15.4%

14.7%

12.7%

18.2%

Major advances in patient/provider/plan electronic data transfer

15.7%

22.0%

14.4%

14.2%

16.5%

20.3%

20.4%

Significant National Health Care Reform Legislation will be Enacted*

21.3%

14.2%

16.4%

13.5%

22.9%

11.9%

22.6%

Premium Increases will continue to slow down

22.5%

23.6%

23.3%

30.7%

14.7%

22.9%

N/A

Further growth/adoption of disease management and wellness

6.7%

12.6%

16.4%

12.7%

11.0%

13.6%

N/A

Medicare HMO reforms

N/A

N/A

N/A

N/A

N/A

N/A

15.3%

Medicare prescription drug coverage

N/A

N/A

N/A

N/A

N/A

N/A

13.1%

Hospital Medicare Outlier Payment Reform

N/A

N/A

N/A

N/A

N/A

18.6%

9.5%

Other

0.0%

3.9%

0.7%

0.1%

0.9%

0.0%

0.7%

Grand Total

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

As you can see, despite the significant segment that views reform as a trend with the greatest overall impact for 2009, the “doubters” have increased in the past year as well. Last year, as the election season was heating up, 14.2% felt reform would be the trend least likely to happen. This year, that number rose to 21.3%.

Also, interestingly, doubts regarding the last most significant innovation have increased. In 2008, 15.0% listed growth in consumerism as the trend least likely to occur or have an impact; that number increased to 22.5% in 2009. But optimism must be increasing for electronic data transfer. In 2008, 22.0% listed this as the least likely trend; that number decreased to 15.7% in 2009.

The conclusions to this aren’t that surprising either: 1) there are plenty of cynics mixed in with those sure that reform will take place; 2) perhaps because consumerism was politically as a Republican agenda, and now we are facing a Democratic agenda, a growing number think Consumerism initiatives will wane; and 3) given the priority the Obama team is giving electronic health records and data transfer, there is less cynicism that this will eventually happen.

I mentioned that I was surprised by answers to the third question: “Which of the following stakeholders do you view as being better off, the same or worse off in the coming year?” Of course, respondents think things are going to be bad all the way around. I just thought they’d be even more negative.

While as expected, few answered “better off” for any category of stakeholder, the level that answered “same” (as opposed to “worse off”) was surprising. I would have expected a resounding “worse off” response for all categories. Even more perplexing was to when these responses were compared to previous years. The change simply wasn’t as large as I would have thought, and consumers were strangely rated in better position for 2009 versus 2008. Perhaps this is due to the specter of reform?

Here’s tables listing responses to this question, compared to the past two years:

2009 Winners and Losers:

By Next Year:

Better Off

Same

Worse Off

Grand Total

Consumers

16.9%

14.6%

68.5%

100.0%

Employers

8.0%

25.0%

67.0%

100.0%

Physician

5.7%

40.2%

54.0%

100.0%

Hospital

3.4%

35.2%

61.4%

100.0%

Health Plans

11.5%

43.7%

44.8%

100.0%

Pharmaceutical

20.5%

44.3%

35.2%

100.0%

 

2008 Winners and Losers:

By Next Year:

Better Off

Same

Worse Off

Grand Total

Consumers

6.5%

18.2%

75.3%

100.0%

Employers

20.5%

32.1%

47.4%

100.0%

Physician

46.2%

41.0%

12.8%

100.0%

Hospital

21.8%

37.2%

41.0%

100.0%

Health Plans

14.1%

35.9%

50.0%

100.0%

Pharmaceutical

49.4%

32.5%

16.9%

100.0%

 

2007 Winners and Losers:

By Next Year:

Better Off

Same

Worse Off

Grand Total

Consumers

7.6%

20.7%

71.7%

100.0%

Employers

19.9%

45.2%

34.9%

100.0%

Physician

46.6%

42.5%

11.0%

100.0%

Hospital

17.8%

37.0%

45.2%

100.0%

Health Plans

11.7%

41.4%

46.9%

100.0%

Pharmaceutical

38.9%

31.9%

29.2%

100.0%

 

Now, that the books are closed on the first month of the last year of the decade, we don’t have to speculate much more on what 2009 will bring. We can just make sure our seat restraints are locked in position, and hang on for the ride.

 

Thursday
Jan222009

The Argument for Incremental Reform

By Clive Riddle, January 22, 2009

The New Yorker magazine, of all places, has one of the best essays on health care reform I’ve read in quite a while. I subscribe to The New Yorker, but often manage to miss anything good, being a shallow New Yorker reader, skimming as I do to browse the movie reviews and cartoons.

Fard Johnmar, President of Envision Solutions, sent me the link. I blog with Fard for ChangeNow4Health, the health care reform initiative which is currently undergoing an upgrade and transformation, hopefully like the health care system may someday soon.

So now I pass the link on to you: “Getting There From Here”, by Atul Gawande, from the current (January 26th, 2009) issue of The New Yorker: http://www.newyorker.com/reporting/2009/01/26/090126fa_fact_gawande?printable=true

So here’s excerpts of three key points the author makes:

  1. “On the left, then, single-payer enthusiasts argue that the only coherent solution is to end private health insurance and replace it with a national insurance program. And, on the right, the free marketeers argue that the only coherent solution is to end public insurance and employer-controlled health benefits so that we can all buy our own coverage and put market forces to work. Neither side can stand the other. But both reserve special contempt for the pragmatists, who would build around the mess we have. The country has this one chance, the idealist maintains, to sweep away our inhumane, wasteful patchwork system and replace it with something new and more rational. So we should prepare for a bold overhaul, just as every other Western democracy has. True reform requires transformation at a stroke. But is this really the way it has occurred in other countries? The answer is no. And the reality of how health reform has come about elsewhere is both surprising and instructive."

  2. “American health care is an appallingly patched-together ship, with rotting timbers, water leaking in, mercenaries on board, and fifteen per cent of the passengers thrown over the rails just to keep it afloat. But hundreds of millions of people depend on it. The system provides more than thirty-five million hospital stays a year, sixty-four million surgical procedures, nine hundred million office visits, three and a half billion prescriptions. It represents a sixth of our economy. There is no dry-docking health care for a few months, or even for an afternoon, while we rebuild it. Grand plans admit no possibility of mistakes or failures, or the chance to learn from them. If we get things wrong, people will die. This doesn’t mean that ambitious reform is beyond us. But we have to start with what we have.”

  3. “So accepting the path-dependent nature of our health-care system—recognizing that we had better build on what we’ve got—doesn’t mean that we have to curtail our ambitions. The overarching goal of health-care reform is to establish a system that has three basic attributes. It should leave no one uncovered—medical debt must disappear as a cause of personal bankruptcy in America. It should no longer be an economic catastrophe for employers. And it should hold doctors, nurses, hospitals, drug and device companies, and insurers collectively responsible for making care better, safer, and less costly.”

Doctor Gawande makes a compelling point in the essay about the other western industrialized nations, all providers of a much more comprehensive national health care system, that belies the perception often advanced by reform advocates in either camp. These nations didn’t throw out old health care systems with the bathwater, and start from scratch. They evolved into them, based on their own unique circumstances. England and France, for example, had World War II as an intervention that led them down their current path.

Doctor Gawande warns that throwing out our system with the bathwater could be more harmful to patients and the nation, than building, albeit with a greater urgency, something new out of what we have already.

By the way, who is Doctor Gawande, you ask? Atul Gawande, MD, MPH, Associate Professor of Health Policy and Management, Harvard School of Public Health is a noted physician and author, and has just been in the news last week, co-authoring an article in the New England Journal of Medicine, “A Surgical Safety Checklist to Reduce Morbidity and Mortality in a Global Population” providing results form eight hospital pilot sites around the world. Doctor Gawande is the head of the School’s “Safe Surgery Saves Lives Study Group" which in collaboration with the World Health Organization introduced and rolled out the Safe Surgery initiative to introduce new safety checklists for surgical teams and implemented the system with the pilot hospitals.

So click the link already, and read it yourself.

Wednesday
Jan142009

Three Specialty Health Companies Top Health Stock Performers During Past Three Months

By Clive Riddle, January 14, 2008

It’s been three months since we came to a national realization that the economy had truly tanked, and we were already deep in the midst of a recession. So, during the past three months, what health care stocks have risen out of the ooze to distinguish themselves in this economic funk?

Looking at the Dow Jones US Health Care Providers Index, which covers a mixture of health plans, administrative organizations and actual providers (the healthcare industry excluding pharama/biotech/medical supplies/equipment), the following companies made the top ten performing stocks for the past three months (analysis courtesy of bigcharts.com):

Symbol

Company Name

PercentChange

LCAV

Lca-Vision Inc

69.31%

CHCR

Comprehensive Care Corpora...

66.67%

INMD

Integramed Amer Inc

52.48%

AUSA

Access Plans Usa Inc

44.19%

HBSC

Human Biosystems

42.86%

AGP

Amerigroup Corp

32.86%

HMSY

Hms Hldgs Corp

30.78%

CBAI

Cord Blood Amer Inc

30.00%

DYII

Dynacq Healthcare Inc

22.87%

EMS

Emergency Medical Svcs Cor...

14.91%

 

Examining the top three performers, it’s interesting that all three are various types of long-established specialty health companies. Conventional wisdom would be that specialty services that are more elective or discretionary, and typically not associated with high levels of insurance coverage, would be poorly positioned for a deep recession. So much for conventional wisdom.

LCA-Vision (www.lasikplus.com) has been operating since 1986 (predecessor company) providing laser vision corrective services. On their home page, you’ll find a “Special Offer- $400 Off Lasik, $0 down, 0% interest for 24 months” and a button you can click: “Free Lasik Vision Exam, a $100 value, schedule online now.”

During the third quarter 2008, the 695 employee company yielded $37,000,000 in revenue, with estimated current annual revenue at $210,000,000. They own and operate 77 LasikPlus fixed-site laser vision correction centers in the U.S. plus d a joint venture in Canada. Their centers are currently located in 59 markets in 33 states.

Comprehensive Care Corporation (www.compcare.com) has been around since 1969, initially operating CareUnit substance abuse recovery services, and now having branched out during the past 14 years to serve as a “Specialty Health Care Company dedicated to the Integration of behavioral and medical care.”

Comprehensive Care, with 270 employees, took in $8,400,000 in revenue in thte third quarter 2008, with estimated current annual revenue at $35,000,000. The company is fully accredited by NCQA, and “manages lives nationwide, providing a wide range of services to health plans and employer groups for Commercial, Medicaid, and Medicare members.”

IntegraMed America (www.integramed.com) states they are “a leading provider of specialty healthcare services in emerging, technology-focused segments. The company currently operates in two healthcare sectors, fertility care and vein treatment.” On their home page, you’ll find the logos for their two brands: Integramed Fertility Network and Vein Clinics of America.

Integramed has operated since 1985, now has 1,180+ employees and yielded $52,000,0000 in third quarter 2008 revenue, with estimated current annual revenue at $200,000,000.

The company states that their network of fertility 101 clinics perform about 25% of all in vitro fertilization (IVF) procedures nationally through 13 contracted fertility centers, located in major markets across the U.S., and via their 2007 acquisition of Vein Clinics of America, they now serve 31 locations, providing non-surgical treatment of varicose veins.

So are companies specializing in laser surgery, behavioral health and fertility/vein treatment centers, what you would have picked to head the charts during the past three months?

Thursday
Dec182008

The Great Recession: as seen by Health Plan Executives

by Clive Riddle

There have been a number of depressions in the American economy since the days of Alexander Hamilton. We only refer to one as the “Great Depression,” and it seems joined at the hip with an entire decade (the 1930’s.) There have been a wide number and range of recessions in American history. It’s hard to know how today this one will fully play out, but it feels different. Perhaps we’ll move on from calling our current situation the “Current Financial Crisis” and we’ll end up calling this the “Great Recession.”

CSC yesterday released results from their November 2008 survey of 30 senior executives representing 26 health plans, with their report "Insuring the Future: Health Plans Respond to the Financial Crisis." Here’s what they found was going on in the minds of our health plan executives relating to whatever you want to call our economic mess; the following is a summary of the questions asked, survey results, and our comments:

  • “Compared to 2001 – 2002, how will the current economic downturn impact your organization?” 73% answered “Bigger Impact; 13% said “About the Same” and 13% answered “Smaller Impact”, “No Impact” or “No Opinion.” [so three-fourths might agree with calling this a Great Recession.]
  • “Which indicator does your organization use to predict and plan for the effects of overall economic changes?” 69% mentioned unemployment; 55% mentioned health care inflation; 31% mentioned investment performance and the answers tailed off from there [makes sense- employment drives membership, inflation drives the medical loss ration, and investment income is the difference between profit and a loss for many plans.]
  • “What is your organization’s response to the downturn?” 48% will implement cost-cutting projects; 41% will implement revenue enhancing projects; and14% will lay off staff. [Revenue enhancement is going to be a challenge in this economic climate if premium increases are what they have in mind. We would project a drastic reduction in negotiated premium increases, let alone benefit buy-downs that will reduce revenue.]
  • “How has the downturn affected demand for your products?” Regarding enrollment, 48% anticipate an increase in individual product enrollment vs. 10% projecting a decrease; while 45% predict a decrease in group sales compared to 7% projecting an increase [what are these 7% smoking, or maybe they just think their going to steal away competitors market share?]; and 69% project an increase in government program enrollment compared to 14% predicting a decrease. Relating to employer group renewals, 54% anticipate a decrease in small business renewals, and 31% project decreases in large group renewals [so the small group market will make significant cuts in providing coverage or eligibility, driving the individual and government program increases, and the group market will continue to diminish in size as it has this throughout this decade.]
  • Also regarding the demand for product type, 67% see an increase in demand for Consumer Driven plans compared to 5% anticipating a decrease, compared to 29% increase/24% decrease for PPOs and 43% increase/14% decrease for HMOs. [So consumer driven plans, which many pundits have seen as an endangered species with the new Democratic administration and congress may still have some legs due to the impact of this recession, and HMOs may make a comeback from the managed care backlash starting ten years ago, as a stronger tool to stabilize costs.]
  • “How will the economic downturn affect other business partners?” 73% anticipate cashflow/solvency problems with provider networks, and 54% predict network stability problems relating to access and availability. [As provider networks serve multiple plans, you can have a reverse supply chain problem compared to the auto industry. With autos, a collapse of the manufacturers can bring down the supply chain. Here a collapse of the provider network supply chain could wreak havoc with the health plans.]

Of course, how one sees the economic situation depends upon one’s personal stake and position at the time. The joke goes, a definition of a recession is when you lose your job. The definition of a depression is when I lose my job.

Friday
Dec052008

The Future of Individual Plan Underwriting vs. Guaranteed Issue

By Clive Riddle

United Health Group betting on continued patchwork of State Regulations

An ongoing conundrum central to health coverage reform is the chicken and egg issues of health plan acceptance of individual health care coverage, mandates and guaranteed issue.

If all plans were required to accept all individual applicants for all policies (full guaranteed issue), the argument goes that significant adverse selection would occur, as only those uninsured with funds that could reliably project their actual health expenses would exceed the insurance premium costs would purchase coverage. In order to correct for this, it is argues that a mandate is required (requiring all of an applicable population to obtain/receive coverage.)

For example, the health plan industry, through America’s Health Insurance Plans (AHIP) have just proposed guaranteed issue in exchange for a mandate, stating in a press release: “Health plans propose guaranteed coverage for people with pre-existing medical conditions in conjunction with an enforceable individual coverage mandate. To help working families afford coverage, advanceable and refundable tax credits should be available, phasing out as income approaches 400 percent of the federal poverty line. Right now, in most states, individuals can be turned down by insurance plans when they apply for individual health plan coverage, if they do not satisfy the plan’s underwriting criteria. The only sure way for an individual to get coverage is to live in one of the few states with guaranteed issue, or obtain employment where group health plan coverage is offered.” (Refer to AHIP December 3rd, 2008 Press Release: Health Plans Offer Comprehensive Reform Proposal.)

But will a health care reform package include such a mandate that extends to the individual, non-group market, particularly in the current economic climate? The Obama reform proposal had focused on employer mandates.

In the current group environment, employees and dependents whose group coverage is ending can self-purchase continuing coverage to maintain their group policy benefits, at 102% of the cost of their group policy under provisions originally set forth under COBRA continuation of benefits regulations, but this coverage is generally limited from 18 to 36 months, depending on the circumstances (refer to http://www.cms.hhs.gov/COBRAContinuationofCov/ for details on COBRA continuation of coverage provisions).

Also in the current environment, guaranteed issue for all individuals just in Maine, Massachusetts, New Jersey, New York and Vermont. Washington provides guaranteed issue for some classes of individuals, and of course many states have incremental provisions extending coverage provisions. (refer to Kaiser Family Foundation StateHealthFacts.org for a summary of Individual Market Guaranteed Issue.)

So the question is, assuming health care coverage reform isn’t so far-sweeping that the individual market is removed due to full universal non-group based coverage, will the future of individual health plan coverage involve:

A. Federal Guaranteed Issue With Some Type of Coverage Mandates
B. Federal Guaranteed Issue Without Mandates
C. Continued Patchwork of State Regulations

United Health Group is betting on the latter, and now selling the right to Guaranteed Issue to qualified prospects. They have announced in a December 4th press release and as reported in the New York Times (refer to the Times December 2nd, 2008 article, UnitedHealth to Insure the Right to Insurance ) that UnitedHealth has unveiled “a ‘first of its kind’ product: the right to buy an individual health policy at some point in the future even if you become sick. Called UnitedHealth Continuity, the product is not actual medical insurance, but is aimed at people who may have insurance now but are worried they may lose it — and may not be able to obtain replacement insurance on their own.”

United states that “with Continuity, consumers only need to go through the medical underwriting process once, at the time of application. Once they are approved, their coverage is guaranteed when they need it regardless of any medical conditions that may have developed in the meantime...With Continuity, consumers can choose from a wide range of health plans, deductibles and optional benefits including traditional health insurance plans, health savings account plans and lower-cost high deductible plans. Once the plan is approved and issued, the Continuity rider gives policyholders the option to leave the plan deactivated while covered by group insurance or activate the plan when they lose or voluntarily leave group health insurance coverage because of early retirement, job loss or simply because the employer no longer offers health benefits.”

The Times reports the cost for holding the Continuity Guarantee is 20% of a standard individual premium, and is subject to underwriting before the Guarantee is issued. On the surface, it is difficult to imagine a large market for United’s Continuity product at such a steep price, given that COBRA is available as an interim stopgap for those with group coverage. The Times quotes a broker who states “I think it’s got very, very limited application.”

However, United’s innovation does open the door to variations on this theme that could have more widespread appeal, if in fact, federal requirements for guaranteed issue do not materialize. Health Plan competition for group coverage could result in rider provisions for no-cost or low-cost individual coverage guarantees, as part of the group policy, so that the employer can advertise improved continuation of coverage or portability in the event employees lose their group eligibility for whatever reason. That type of product could have widespread interest in the group market.